[Congressional Record Volume 154, Number 74 (Tuesday, May 6, 2008)]
[House]
[Pages H3096-H3099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COIN MODERNIZATION AND TAXPAYER SAVINGS ACT OF 2008
Mr. GUTIERREZ. Madam Speaker, I move to suspend the rules and pass
the bill (H.R. 5512) to authorize the Secretary of the Treasury to
prescribe the weights and the compositions of circulating coins, and
for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5512
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Coin Modernization and
Taxpayer Savings Act of 2008''.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) International demand along with market speculation for
commodity metals has, over the past several years, increased
the cost of producing circulating coins in the United States.
(2) In a July 30, 2007, letter to the Congress, the
Secretary of the Treasury, with support of the
Administration's Office of Management and Budget, requested
that legislation be put forward to authorize the Secretary of
the Treasury to make changes to the composition of
circulating coins.
(3) The United States Mint has studied alternative metals
for use in circulating coins, as noticed in its 2004 annual
report.
(4) In 1943, the United States Mint produced zinc-coated
steel pennies in response to war-time demands for copper.
(5) The United States Mint gained further experience
changing the metal content of pennies in 1982, when it began
producing copper-coated zinc pennies as a result of rising
copper prices.
(6) The Royal Canadian Mint has produced for several years
a copper-coated steel 1-cent coin that is similar to the
United States penny at a significantly lower cost than the
cost to produce the United States penny.
(7) Given the current cost to make a penny and volume of
pennies minted, by simply reducing penny production costs to
face value, the United States will save more than
$500,000,000 in the next 10 years alone.
(8) Reducing the cost to produce a nickel to face value
will save the United States an additional $60,000,000 per
year.
[[Page H3097]]
(9) Commodity metal prices are often cyclical in nature,
and can be inflated by speculation, so it is important that a
solid trend in the rising price of a commodity metal be
established before any change in the metal content of a coin
is made.
SEC. 3. IMMEDIATE REDUCTION IN THE COST OF PRODUCING 1-CENT
COINS THROUGH THE USE OF STEEL PENNIES.
Subsection (c) of section 5112 of title 31, United States
Code, is amended to read as follows:
``(c) Composition of 1-Cent and 5-Cent Coins.--
``(1) 1-cent coin.--
``(A) In general.--Subject to paragraph (2), beginning 270
days after the date of the enactment of the Coin
Modernization and Taxpayer Savings Act of 2008, the 1-cent
coin shall--
``(i) be produced primarily of steel; and
``(ii) meet such other specifications as the Secretary may
determine to be appropriate, including any change in the
weight from that specified in subsection (a)(6).
``(B) Treatment.--The 1-cent coin shall be treated to
impart a copper color to the appearance of the coins so that
the appearance is similar to 1-cent coins produced of a
copper-zinc alloy.
``(C) Exception for lincoln bicentennial numismatic
pennies.--No provision of this paragraph shall apply with
respect to 1-cent coins described in section 304 of the
Presidential $1 Coin Act of 2005 that are issued for
numismatic purposes.
``(2) Alternative 1-cent coin composition.--
``(A) In general.--If, before the end of the 90-day period
beginning on the date of the enactment of the Coin
Modernization and Taxpayer Savings Act of 2008, the Secretary
determines that, with the addition of any other element to
any alloy of zinc and copper of which 1-cent coins could have
been composed as of the day before such date of enactment,
there is a way--
``(i) to produce 1-cent coins of the same diameter, general
composition, and general weight as 1-cent coins produced in
accordance with this subsection as of the day before such
date of enactment; and
``(ii) to achieve the goals of paragraph (1) by reducing
the unit cost to produce the 1-cent coin to less than 1 cent
while retaining such coin's ease of use and ensuring ease of
co-circulation with 1-cent coins of the diameter and weight
already circulating as of such date of enactment for ordinary
commerce,
the Secretary may add any such element and continue
production of 1-cent coins of the same diameter, general
composition, and general weight as 1-cent coins produced in
accordance with this subsection as of the day before such
date of enactment instead of complying with paragraph (1).
``(B) Effective period.--This paragraph shall only apply if
the change to the new composition and the subsequent drop in
the production cost of the 1-cent coin referred to in
subparagraph (A) can be achieved before the end of the 270-
day period referred to in paragraph (1).
``(C) Report to the congress.--Any determination and action
by the Secretary under subparagraph (A) shall be promptly
reported to the Congress.''.
SEC. 4. AUTHORITY TO CHANGE METALLIC CONTENT OF 5-CENT COINS
TO LESS COSTLY ALTERNATIVE.
(a) In General.--Subsection (c) of section 5112 of title
31, United States Code, (as amended by section 3) is amended
by adding at the end the following new paragraph:
``(3) 5-cent coin.--
``(A) In general.--After the end of the 2-year period
beginning on the date of the enactment of the Coin
Modernization and Taxpayer Savings Act of 2008, the Secretary
shall produce no 5-cent coin that is not primarily made of
steel with a coating of nickel, that can co-circulate with
the existing supply of 5-cent coins and work interchangeably
in coin handling machines, except that--
``(i) the Secretary shall make no change to the content of
the existing 5-cent coin if at that point the unit cost of
production of such coins is lower than the face value of the
coin; and
``(ii) if the report issued by the Secretary pursuant to
section 6 indicates that a different metallic content of
circulating 5-cent coins is both functional and
interchangeable, and more economical to produce in both the
short and long term, the Secretary shall propose such content
to the Congress in the form of a legislative recommendation.
``(B) Factors to be considered.--In prescribing the weight
and the composition of the 5-cent coin, the Secretary shall
consider--
``(i) factors relevant to the potential impact of any
revisions to the weight and composition of the material on
the current coin suppliers;
``(ii) factors relevant to the acceptability of new coinage
materials, including the effect on vending machines and
commercial coin processing equipment and making certain, to
the greatest extent practicable, that any new coins work
without interruption in existing coin acceptance equipment
without modification; and
``(iii) such other factors that the Secretary, in
consultation with merchants who would be affected by any
change in the weight and composition of the 5-cent coin,
vending machine and other coin acceptor manufacturers,
vending machine owners and operators, transit officials,
municipal parking officials, depository institutions, coin
and currency handlers, armored-car operators, car wash
operators, and American-owned manufacturers of commercial
coin processing equipment, considers to be appropriate and in
the public interest, after notice and opportunity for
comment.
``(C) Comment and selection process.--In making any
determination with respect to any change in the weight and
composition of the 5-cent coin, the Secretary shall enter
into a formal rulemaking process that includes a hearing on a
record in addition to the publication of notice and
opportunity for comment.''.
(b) Technical and Conforming Amendment.--Section 5112(a)(5)
of title 31, United States Code, is amended by striking ``and
weighs 5 grams''.
SEC. 5. AUTHORITY TO CONDUCT RESEARCH AND DEVELOPMENT ON ALL
CIRCULATING COINS.
To accomplish the goals of this Act, the Secretary may
conduct any appropriate testing within or without the
Department of the Treasury, and may solicit input from or
otherwise work in conjunction with entities within or without
the Federal government including independent research
facilities or current or potential suppliers of the material
used in volume production of circulating coins, to complete
the report referred to in this Act and to develop, evaluate
or begin the use of new metallic material for such
production.
SEC. 6. BIENNIAL REPORT TO CONGRESS ON CURRENT STATUS OF COIN
PRODUCTION COSTS AND ANALYSIS OF ALTERNATIVE
CONTENT REQUIRED.
(a) Biennial Report Required.--Before the end of the 270-
day period beginning on enactment of this Act, and at 2-year
intervals following the initial report, the Secretary of the
Treasury shall submit a report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate analyzing
production costs for each circulating coin, cost trends, and
possible new metallic materials or technologies for the
production of circulating coins.
(b) Detailed Recommendations.--The reports required under
this section shall contain detailed recommendations for any
appropriate changes to the metallic content of circulating
coins in such a form that the recommendations could be
enacted into law as appropriate.
(c) Improved Production Efficiency.--The reports required
under this section shall include recommendations for changes
in the methods of producing coins at the United States Mint
that would further reduce the costs to produce circulating
coins, and include notes on any legislative changes that
might be necessary to achieve such goals.
(d) Minimizing Conversion Costs.--The reports required
under this section shall--
(1) include no recommendation for new specifications for
producing a circulating coin that would require significant
change to coin-accepting and coin-handling equipment to
accommodate changes to all circulating coins simultaneously,
except for any potential change to the 5-cent coin as
authorized under section 4; and
(2) to the greatest extent possible, recommend
specifications that, while consistent with other portions of
this section and the amendments made by this Act, require no
changes to coin-accepting or coin-handling equipment
whatsoever to accommodate both coins produced with the new
specifications and coins produced as of July 31, 2007.
(e) Fraud Prevention.--The reports required under this
section shall make no recommendation for a specification
change that would facilitate or allow the use of a coin with
a lesser value produced by another country, or the use of any
token or other easily or regularly produced metal device of
minimal value, in the place of a circulating coin produced by
the Secretary.
The SPEAKER pro tempore (Ms. Jackson-Lee of Texas). Pursuant to the
rule, the gentleman from Illinois (Mr. Gutierrez) and the gentleman
from Illinois (Mr. Roskam) each will control 20 minutes.
The Chair recognizes the gentleman from Illinois.
General Leave
Mr. GUTIERREZ. Madam Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks on this legislation and insert extraneous material
thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
There was no objection.
Mr. GUTIERREZ. Madam Speaker, I yield myself 5 minutes.
I rise today in strong support of H.R. 5512, the Coin Modernization
and Taxpayer Savings Act of 2008, and I want to thank the gentleman
from Ohio (Mr. Space) for all of his hard work and perseverance in
getting this very important piece of legislation to the House floor.
It's not every day that the House considers legislation that has the
potential of saving U.S. taxpayers over
[[Page H3098]]
$100 million a year, but that is exactly what we're doing today with
H.R. 5512, and Mr. Space should be proud of his efforts and
accomplishments on this bill.
Since March of 2003, increasing metal prices, caused by high world
demand for core metals, have driven the costs of copper and nickel up
by 300 percent, while zinc has increased 450 percent. As a result, the
cost of producing our Nation's circulating coins have increased
dramatically.
In fiscal year 2007, it cost nearly 2 cents to make each penny and 10
cents for each nickel, needlessly costing the American taxpayers over
$100 million last year alone, but by simply bringing the cost of
producing pennies and nickels down to their face value, H.R. 5512 will
save the government nearly $1 billion over the next 10 years.
In brief, H.R. 5512 requires the U.S. Mint to immediately take steps
to lower the production costs of pennies, requires the Mint to research
an alternative composition for the nickel in 2 years, and grants the
Mint the authority to research lower cost alternative metal content for
all U.S. coins.
First, H.R. 5512 requires the Mint to begin production of a steel
penny within 9 months of enactment. This should result in immediate and
substantial savings to taxpayers. The bill also gives the Mint the
flexibility to research other low-cost alternatives to a steel penny
within the same 9-month period and report to Congress any alternative
recommendation.
Second, the bill requires the Mint to begin producing a nickel-coated
steel nickel in 2 years, unless the Mint develops a less costly
alternative and recommends such an alternative to Congress or the cost
of producing the nickel in its current form is below the coin's face
value.
Finally, H.R. 5512 confirms that the Mint has the authority to
conduct research and development into alternative composition that will
lower production costs for all U.S. coins. This provision, along with
the bill's requirement that the Mint issue a biennial report to
Congress on the current status of coin production costs and an analysis
of alternative content, will ensure that we avoid situations of
negative seignorage for U.S. coins in the future.
Bottom line, Madam Speaker, if we continue under the status quo, with
each new penny and nickel we issue, we will be contributing to our
national debt by almost as much as the coin is worth. These losses are
mounting rapidly, and we need to act immediately to lower the costs of
producing the penny and the nickel.
H.R. 5512 will give the U.S. Mint the authority it needs to make the
necessary changes to our coins without creating an undue burden on the
relevant industries or causing a disruption in the minting process.
For these reasons, I urge all Members to support its passage.
I reserve the balance of my time.
{time} 1830
Mr. ROSKAM. Madam Speaker, I yield myself such time as I may consume.
I am pleased to rise in support of H.R. 5512, the Coin Modernization
and Taxpayer Savings Act of 2008.
First, I would like to thank Chairman Frank, Chairman Gutierrez and
my colleague from Ohio (Mr. Space) for bringing this important bill to
the floor. And I would also like to thank Ranking Member Bachus for his
support of my own coin content bill, H.R. 4036, the Cents and
Sensibility Act, which I introduced with Mr. Castle of Delaware.
Madam Speaker, last year, I took my son to visit the Denver Mint in
Colorado, and there we discovered during our tour that the cost of a
penny was--actually what the gentleman from Illinois just referred to--
1.7 cents, the cost to the government to make each single penny. And
that's obviously more than it's worth. At current production rates, the
Federal Government spends more than $134 million to produce eight
billion pennies annually at a loss of $54 million to the taxpayer. It
makes no sense.
Two years ago last Thursday, when I was not yet a Member of this
body, the U.S. Mint sent to Congress a letter stating what my son and I
discovered on our trip. And since then, a whole lot of nothing has
happened. And I think, frankly, the Mint has been a little bit remiss
in not bringing up a thoughtful suggestion on cost cutting. This bill
will address the short-term problem of the costly penny and I believe
the longer term issues of what circulating coins should be made of.
I've got to say I'm flattered in a way in that there are elements of
this bill that have taken some of the elements of the bill that I
introduced. So when H.R. 5512 was introduced, this bill, in other
words, it was done so with some of the provisions that I was pleased to
offer. The most important point is to immediately change the
composition of the penny from copper-coated zinc to copper-coated
steel. This change would slash the cost to make the penny.
For several years, Canada, our neighbors to the north, have been
saving money producing its one cent coin, which is essentially
identical to the U.S. penny, out of steel in this manner, originally in
the same Tennessee plant in which our penny blanks are made. This
provision blends an enormous cost-saving opportunity with ensuring that
the content of the penny remains metal and securing American jobs that
currently produce the penny.
Two other provisions from my bill are included in H.R. 5512, that is,
the provision giving the Mint explicit authority to do research and
development with outside firms on potential coin content, an authority
that the Mint says now is ambiguous, and this bill takes away that
ambiguity. And secondly, requiring regular reports from the Mint to the
Congress on production cost trends and strategies to reduce costs,
Madam Speaker, either with different content or different production
techniques, either one.
These two provisions will ensure that the Mint is performing its due
diligence in a timely manner and keeping the cost of production of all
circulating coins down while maintaining communication with those who
currently are involved in the industry on the production, supply and
research sides.
Madam Speaker, without wanting to be overly critical of the Mint, let
me just point out that I think that they have not done exactly as I
think would be wise as it relates to solving this cost production
problem. It sent legislation here proposing to transfer power from
Congress to the Mint on the authority to decide what coins should be
made of, what they would weigh, authority explicitly held by Congress
since the founding of this country.
More recently, the Mint has criticized the bill before us because it
would force the Mint to continue making coins out of metal. I don't
know about your constituents, Madam Speaker, but I can guess, along
with mine, that they're not interested in having coins made out of
plastic, and even less enthusiastic if they found out that the decision
to switch had been made by a few unelected bureaucrats in a gray
building somewhere in Washington, DC. This is our responsibility to
make these decisions. And worse, if such a switch were made the wrong
way, it could force billions in conversion costs onto coin handlers,
vending machines and banks, that would eventually be passed onto
customers.
As a Member representing the Land of Lincoln, Madam Speaker, I'm
pleased that H.R. 5512 satisfies the need to reduce the cost to
taxpayers, retains American jobs, all the while preserving the small
one cent coin that has been the foundation of our economic system since
its inception.
I urge my colleagues to support the bill.
Madam Speaker, I reserve the balance of my time.
Mr. GUTIERREZ. I would like to yield as much time as he may consume
to the author and chief proponent of the bill, Mr. Space from Ohio.
Mr. SPACE. Madam Speaker, I'd like to thank the gentleman from
Illinois, Subcommittee Chairman Gutierrez, for his cooperation and
assistance in this legislation. I would also like to thank the ranking
member, Mr. Paul from Texas, as well. And I would further like to
extend my gratitude to Chairman Frank and Ranking Member Bachus for
their work in advancing this important piece of legislation that will,
in fact, eliminate wasteful governmental spending, saving the taxpayers
a billion dollars over the next 10 years.
Right now, our government is needlessly throwing away money in the
production of coins. Estimates, as have been indicated, suggest that
we're spending 1.7 cents or more per penny
[[Page H3099]]
produced in this country, as well as 9.5 cents per nickel.
The content of a penny, as it exists now, is roughly 97\1/2\ percent
zinc, with the balance copper. The content of a nickel is roughly 25
percent nickel and 75 percent copper. And during the last 5 years,
we've seen huge increases in the price of copper, nickel and zinc. As
Subcommittee Chairman Gutierrez indicated, that is attributable to
excess demand throughout the world on those metals, along with
speculation in the market. This legislation is designed with an eye
toward common sense to save, again, roughly $100 million per year over
the next 10 years.
Wasteful spending is especially egregious at a time when Americans
are facing the pitfalls of an economic downturn. This legislation will
begin the process of eliminating this wasteful spending by mandating
changes in the content of the penny and the nickel and giving the
Treasury a louder voice in the process.
Based on production numbers, again I want to emphasize these changes
will save taxpayers $1 billion over the next 10 years. The legislation
will also help Congress be more responsive to market changes in the
value of different metals over time, helping it to be more efficient
and precise in its expenditures.
The savings can be spent to put money into our schools, improve our
infrastructure, increase access to health care, all the things that
many Americans--certainly Americans I represent back in Ohio's 18th
District--desperately need.
As a Congress, we have a responsibility to use our funds in a
responsible fashion. This legislation is a step toward more responsible
spending and represents a bipartisan effort to work together on a
measure that encompasses a high degree of common sense. Refreshing.
Mr. GUTIERREZ. I congratulate the gentleman from Ohio on that
wonderful speech.
Mr. ROSKAM. Madam Speaker, I yield back the balance of my time.
Mr. GUTIERREZ. I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Illinois (Mr. Gutierrez) that the House suspend the
rules and pass the bill, H.R. 5512, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. CARTER. Madam Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
The point of no quorum is considered withdrawn.
____________________